Sequester delays some contract awards

Apr. 17, 2013 - 02:21PM
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Many of the government’s biggest pending contracts are encountering significant delays.

Among the 20 largest pending contracts, the Army is facing delays in awarding six procurements worth nearly $22 billion combined, according to new estimates from Deltek, a market research firm.

“We’ve noticed the delays,” said Jennifer Sakole, principal analyst for federal information services at Deltek, speaking about pending solicitations not just in the defense sector but across the government.

“We think that a number of those delays are a direct result of contracting offices waiting to receive guidance in regards to specific cuts if they’re going to impact these programs,” Sakole said. “So they’re waiting to move forward until they receive that guidance.”

Asked if the sequester could delay pending solicitations, Army spokesman Matthew Bourke said in general, “The short answer is yes, the Army may have to delay contracts because of the $14 billion shortfall we’re currently facing.”

“The Army may not pick up options or may negotiate during an option period,” Bourke wrote in an email. “Contractors that provide base operations support will likely feel the impact the greatest.”

Among the largest pending Army procurements is an $8 billion war fighter training contract, whose award Deltek expects to be delayed from June 2013 to March 2014. Another Army contract for space and missile technology with an estimated value of $4.9 billion has been pushed back from an April 2014 award to August 2014, according to Deltek.

The government’s largest pending solicitation is the Air Force’s Training Systems Acquisition III program, a 10-year deal worth an estimated $20.9 billion, according to Deltek.

The firm said the award date on that contract solicitation has been pushed back by about a year from earlier estimates. Deltek now expects an award in June 2014.

Still, Air Force spokeswoman Estella Holmes said sequestration hasn’t been a factor “due to the nature of our acquisition.”

“We’re just pre-qualifying contractors to do simulator work,” she wrote in an email. “The impact, if any, would be at the task order level and it would be case by case.”

Overall, Deltek figures show 14 delays among the top 20 largest pending awards. And a previous Deltek analysis last fall revealed that as a group, the government’s top 20 pending contracts combined were worth nearly 40 percent less than the top 20 contracts from the year before.

The drop, analysts said, came amid a renewed push to avoid duplicative services and increasing scrutiny on contracts as the federal budget situation worsened.

Still, Deltek officials said at the time they expect spending to pick back up after a low point in 2013 and 2014. Kevin Plexico, vice president of Deltek’s federal information solutions, said in a recent webinar that the impact from the sequester still lags behind the sharp drop a few years ago in the stock market and housing industry.

At the Pentagon, spokeswoman Maureen Schumann said a pending Defense Department contract for the so-called Global Network Services program, an estimated $5.75 billion procurement, has seen a delay, but not because of the federal budget environment.

She said the procurement is currently in the “requirements development and general acquisition planning process.”

“We expect to complete this process and release the RFP in the near future,” she wrote in an email. “The delay in release of the RFP originally anticipated in November is a result of deliberate acquisition planning and not a result of sequestration. We do not anticipate a significant impact to operations as a result of sequestration.”

The GNS telecommunications contract has been discussed as a possible consolidation of four other defense contracts, according to Deltek.

Schumann said DoD’s Defense Information Analysis Centers allow the Pentagon “to reduce duplication and build on previous research, development and other technical needs.”

“In this time of budgetary uncertainty, the importance of DoD’s IACs is actually enhanced,” she wrote “IACs serve as a proven resource for maximizing the value of each dollar the department spends.”

She also said two other big defense procurements — Defense Systems Technical Area Tasks, $3 billion, and Homeland Defense and Security Technical Area Tasks, $900 million, according to Deltek estimates — aren’t changed due to the expected impact of sequestration.

Deltek estimates the Defense Systems contract will be awarded in December, which is on track with the firm’s previous projections. But Deltek estimates a later award date for the Homeland Defense contract. While the firm had projected an award in May, it’s now projecting a December 2013 award.

In an email, the National Institutes of Health Information Technology Acquisition and Assessment Center, which administers governmentwide technology contracts, said its pending chief information officer contract “will not be affected by recent federal budget issues.”